Gundlach: New DoubleLine Flexible Fund Aims To Be ‘Transparent’

By Michael Aneiro

DoubleLine founder Jeffrey Gundlach hosted a webcast today to discuss the firm’s two newest funds, the DoubleLine Flexible Income Fund (DFLEX) and the DoubleLine Low Duration Emerging Markets Fixed Income Fund (DBLLX), both designed generally to offer healthy yields while minimizing interest-rate risk. He spent most of the time talking about the flexible fund, which marked an about-face for such a previously outspoken critic of so-called unconstrained bond funds. Without ever using the word “unconstrained,” Gundlach said he hopes to differentiate this fund from similar go-anywhere funds by keeping investors apprised if it makes any big changes in its holdings.

“One of the things I don’t like about highly active funds is that investors don’t know what they’re in,” Gundlach said, adding that the fund wants to be “very transparent ” so it “isn’t just a blind pool where investors don’t know what’s happening.” Still, he said the fund is “designed to mutate according to market conditions” and that its titular flexibility lets it go negative on duration by using short positions if it wants. “We know that many investors are worried about interest rate risk,” he said and it’s “hard to argue” that interest rates won’t move higher over time. At the moment, he said the fund is long-only and doesn’t own any Treasury bonds.

Gundlach parried some skeptical questions at the end of the webcast, such as one asking why this fund seems similar to products offered by competitors years ago, to which Gundlach basically said that you can’t always rush these things, noting that the fund is based on a strategy DoubleLine has already been implementing for institutional clients for the past couple of years. To another listener asking if these new new offerings stretch DoubleLine too thin, he replied “Hardly,” even if he “can sympathize” with the idea that investors can sometimes face too much choice. He said there are no plans for other new DoubleLine funds on the drawing board except potentially a non-dollar-denominated international bond fund.